FEDERAL COURT OF AUSTRALIA
Chilcott v HomeSec Finance Express Pty Ltd [2011] FCA 729
Citation: Chilcott v HomeSec Finance Express Pty Ltd [2011] FCA 729 Parties: SHANE LAWRENCE CHILCOTT & NATASHA ANNE CHILCOTT v HOMESEC FINANCE EXPRESS PTY LTD (ACN 079 939 610) and XPRESS LOAN COMPANY PTY LTD (ACN 127 844 919) File number: TAD 38 of 2010 Judge: MARSHALL ACJ Date of judgment: 28 June 2011 Catchwords: TRADE PRACTICES – alleged misleading and deceptive conduct – ss 52 and 82 of the Trade Practices Act 1974 (Cth) – representations made by agent of lender regarding a home loan strategy – alleged unconscionable conduct by short term lender – s 51AA of the Trade Practices Act 1974 (Cth) Legislation: Trade Practices Act 1974 (Cth) ss 51AA, 52, 82, 87 Cases cited: ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51
Planet Securities Unit Trust v Dalrymple [1999] QSC 204Dates of hearing: 11, 12, 13 and 28 April 2011 Place: Hobart Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 47 Counsel for the Applicants: Mr S McElwaine Solicitor for the Applicants: Shaun McElwaine & Associates Counsel for the First Respondent: Mr S Woolley Solicitor for the First Respondent: Logie-Smith Lanyon Counsel for the Second Respondent: Mr D Wallace Solicitor for the Second Respondent: Wallace Wilkinson Webster
IN THE FEDERAL COURT OF AUSTRALIA
TASMANIA DISTRICT REGISTRY
GENERAL DIVISION
TAD 38 of 2010
BETWEEN: SHANE LAWRENCE CHILCOTT & NATASHA ANNE CHILCOTT
ApplicantsAND: HOMESEC FINANCE EXPRESS PTY LTD (ACN 079 939 610)
First RespondentXPRESS LOAN COMPANY PTY LTD (ACN 127 844 919)
Second Respondent
JUDGE:
MARSHALL ACJ
DATE OF ORDER:
28 JUNE 2011
WHERE MADE:
HOBART
THE COURT ORDERS THAT:
1.The application is dismissed.
2.The cross claim of the second respondent is dismissed without an adjudication of its merits.
3.The applicants pay the respondents’ costs of the substantive proceeding to be taxed in default of agreement.
4.There is no costs order on the cross claim.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
TASMANIA DISTRICT REGISTRY
GENERAL DIVISION
TAD 38 of 2010
BETWEEN: SHANE LAWRENCE CHILCOTT & NATASHA ANNE CHILCOTT
ApplicantsAND: HOMESEC FINANCE EXPRESS PTY LTD (ACN 079 939 610)
First RespondentXPRESS LOAN COMPANY PTY LTD (ACN 127 844 919)
Second Respondent
JUDGE:
MARSHALL ACJ
DATE:
28 JUNE 2011
PLACE:
HOBART
REASONS FOR JUDGMENT
Lake Barrington is a picturesque waterway nestled at the base of the Forth River Valley about 40 kilometres south of Devonport in Northern Tasmania. It is a popular venue for water-skiers. The applicants, Mr and Mrs Chilcott, enjoy water-skiing. During Easter 2009 they observed a property for sale which contained a shack close to the lake. On 11 April 2009, the Chilcotts signed a contract to purchase that property (“the Wilmot property”). The purchase price was $135,000. The Chilcotts paid a deposit…
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- Case
- [2011] FCA 729
- Decision Date
CaseChat Overview and Summary
The legal issues that the Court needed to decide were whether the applicants were misled or deceived by the representations made by the second respondent regarding the short-term financing, and whether the second respondent engaged in unconscionable conduct by taking advantage of the applicants' vulnerability. The Court needed to assess whether the applicants were misled into believing that the loan was for investment purposes when, in fact, it was intended for purchasing a holiday shack. Additionally, the Court had to determine whether the second respondent's conduct amounted to unconscionable behaviour under the Trade Practices Act.
The Court found that the applicants were not misled or deceived by the second respondent's representations regarding the purpose of the loan. The Court held that the Chilcotts were aware that they had to state the purpose of the loan as investment to secure the loan. They willingly participated in the charade and did not challenge the need to obtain a real estate appraisal about what rent could be achieved from the Wilmot property. The Court concluded that the Chilcotts' desire was to obtain a loan to fund their dream holiday shack, and they did not care about the means to achieve their purpose. The Court further held that the second respondent's conduct did not amount to unconscionable behaviour because it was not established that the second respondent took advantage of the applicants' vulnerability. The Court dismissed the application and the cross-claim, and ordered the applicants to pay the respondents' costs of the substantive proceeding.
In summary, the Court found that the applicants were not misled or deceived by the second respondent's representations regarding the purpose of the loan, and that the second respondent's conduct did not amount to unconscionable behaviour. The Court dismissed the application and the cross-claim, and ordered the applicants to pay the respondents' costs of the substantive proceeding.
Orders
Orders of the court
1. The application is dismissed.
2. The cross claim of the second respondent is dismissed without an adjudication of its merits.
3. The applicants pay the respondents’ costs of the substantive proceeding to be taxed in default of agreement.
4. There is no costs order on the cross claim.
Note:
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
The second claimed representation is contained in paragraph 3.3 of the statement of claim, which alleges that:(a)cting in reliance upon the…representations, the [Chilcotts] advised [HomeSec], by its agent Justin Goodwin, that they would agree to accept short term financing as arranged by him for a period of one month…to complete the purchase contract (for the Wilmot property).(i) the business declaration purpose issue For reasons which follow, the Court rejects the submissions of Mr McElwaine on what he has described as the “business declaration purpose point”. It is not in dispute that when Mr Chilcott approached Mr Goodwin about securing funding for the purchase of the Wilmot property he told Mr Goodwin that:·he wanted to buy a shack; and·the shack was near a lake where he and his family water-skied. When asked why, in several loan applications, he signed declarations stating that the loan was for investment purposes, Mr Chilcott said that Mr Goodwin told him to say the loan was for “investment purposes” because it was “easier to get the money a lot quicker”. Mr Goodwin asked Mr Chilcott to obtain a real estate appraisal about what rent could be achieved from the Wilmot property. Mr Chilcott was happy to oblige and go along with the charade that he was buying the Wilmot property as an investment. He didn’t challenge the need to obtain a rental appraisal. He gave evidence that he didn’t think it was “a big deal” or that “there was any difference”. To the extent that it was false and misleading for Mr Goodwin to say that the Chilcotts should state that their purpose for the acquisition of the shack was for investment purposes, it was a false situation in which the Chilcotts were happy to knowingly participate. The Chilcotts desire was to obtain a loan to fund their dream holiday shack. They did not care if they had to put down on paper, when seeking to finance their purchase, that they would use the land for investment or business purposes. It was the end that mattered to the Chilcotts, not the means. It was not a case about being misled as to the purpose of the loan. In any event, the Chilcotts would not have been able to obtain the loan from Xpress had they not agreed that the loan was for investment purposes. It is also conceivable that Mr Goodwin genuinely viewed the loan as in the nature of an investment because the Wilmot property was a second property for the Chilcotts, their family home being located in Penguin (“the Penguin property”). For the foregoing reasons the Court does not accept that Mr Goodwin misled or deceived the Chilcotts into obtaining a loan for the purchase of the Wilmot property by telling them to state the purpose of the acquisition was for an investment. The Chilcotts were content to apply for the loan in full knowledge that to achieve their purpose they had to say the loan was for investment purposes. Otherwise HomeSec could not help them and they understood that fact. The Chilcotts were not misled or deceived in this respect but were willing participants in a charade.(ii) the short term finance issue